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A trial centering on the question of whether franchisees are employees or independent contractors is setting off alarms within the franchising industry. The case involving Coverall North America, which goes to trial Monday, has drawn attention because U.S. District Judge William Young ruled in a preliminary decision that the company didn't establish that franchisees are independent contractors. IFA has been actively working with Massachusetts legislators, urging them to exempt franchise businesses from the state's independent-contractor law.

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After spending 10 years working for a consulting business, Amyn Ali was drawn to franchising because it gave him a degree of independence. "Everyone wants to be their own boss for one reason or another. After a while, I just wanted to have control over my own destiny," he said. Ali is a franchisee for Wing Zone, Dunkin' Donuts, Baskin-Robbins and Papa John's.

A recent wrongful-termination lawsuit could test a move by the National Labor Relations Board’s general counsel to treat franchisors as joint employers. That decision has drawn criticism from McDonald’s and from IFA. IFA says the decision alters the traditional franchise business model by limiting the independence of franchisees and making them more vulnerable to groups attempting to organize workers.

The National Labor Relations Board's joint employer ruling would threaten the franchise model by taking away franchisees' status as independent contractors and opening franchise employees up to unionizing, Russell Mills writes. "It upends decades of American law. It flies in the face of the structure of franchising, which is a genius way to [do] business," the Oklahoma Council on Public Affairs' Trent England said.

Legislators in Maine, California, Pennsylvania and Massachusetts have proposed bills that would strengthen the rights of franchisees, including giving operators the right to join franchisee associations, making it easier for them to renew franchise agreements at current terms and allowing operators to set their own prices and operating hours. "Franchisers and franchisees who are upholding the terms of their contracts will unfortunately be negatively affected, as will consumers, as these bills would effectively allow franchisees to avoid contractual requirements while still using the franchise brand," IFA President and CEO Steve Caldeira said.

Franchise ownership can jump-start a career and immerse entrepreneurs in a well-established and proven business model, Sandra Block writes. However, she adds that potential franchisees should consider important factors such as startup costs, company rules, competition, the market and independent research before investing.